There are many reasons why you need liability coverage for your home business. Liability is perhaps the greatest risk to your home business.
You may be thinking your home insurance policy already has you covered, when it may not. A home insurance policy may provide coverage for things like books, tools, and equipment necessary to run your business, but you’ll need additional coverage to alleviate potential losses. Commercial General Liability (CGL) insurance covers damages that your business is found to be legally liable for, which are typically caused by bodily injury or property damage to third parties, including when you and your staff are conducting business off-site.
The value of liability coverage for your home business
Situation 1: A client falls while walking up the steps to your home.
The liability on your home insurance policy will cover a guest injured on your property, but it may not if the person injured is a customer or supplier who’s on your premises for business-related reasons. You’ll need CGL coverage to mitigate claims made against you arising from property damage or bodily injury to a third party. A CGL policy will protect your business against lawsuits arising from a client slipping, tripping, or falling in your workplace, including medical expenses that ensue.
Situation 2: You’re an independent consultant working out of your home. You’ve been accused of making an error in your work causing financial loss and have been sued for $500,000.
Being sued can be a very stressful time for any business owner. A lawsuit brings with it concerns over financial stability as well as loss of reputation. While the commercial general liability policy provides coverage in the event of property damage or bodily injury, it provides no coverage for financial loss. Additionally, there are also common exclusions for bodily injury and property damage resulting from a professional service. In order to safeguard your business, you’ll need to obtain an Errors & Omissions Liability insurance policy, which provides liability coverage if your customers incur a financial loss, or there’s bodily injury or property damage (including legal expenses) resulting from an error in the performance of your professional service.
Situation 3: A competitor accuses you of making false accusations about their product in the flyer for your business.
Accidents happen all the time. You may inadvertently defame a competitor with material included in your company’s promotional materials, and in turn, the competitor can file a libel suit against you. Or you may have come up with a company logo that closely resembles another company’s design, which you hadn’t heard of before they filed a suit against you. When such situations arise, it’s handy to have personal and advertising injury liability coverage to safeguard your assets and protect your brand. Personal and advertising injury liability protects against offences made by you or your staff during the course of a business, including copyright infringement in advertisements, libel and slander, violation of privacy, and trademark claims.
When you’re considering ways to protect the longevity of your business, liability coverage for your home business can make all the difference.